183% interest being charged on loans to Derry families
A leading loans company with 5,000 customers in Londonderry today defended its practices following claims that it is charging “extortionate” interest rates.
English-based Provident Financial confirmed today that its rate of interest stood at 183.2%, but said that the vast majority of its customers were satisfied with the terms.
Provident Financial currently has 40,000 customers in Northern Ireland and one in every 24 Derry people per head of population is registered with the company, the spokesman revealed.
But local MLA Mary Bradley has expressed concern over the interest rates on loans being promoted by Provident and other organisations in the current economic climate.
She said today: “During these times of financial struggle many financial organisations are promoting loans with ridiculous interest rates.
“They know many people are desperate in these times with the rising cost of living and an increase in unemployment.
“But I would urge people to be sensible and not give into these promotions.
“The loans offered come with huge interest rates tags and they will undoubtedly result in more financial hardship and stress for people.”
Speaking specifically about Provident, Mrs Bradley claimed they were emailing people across Northern Ireland offering £500 loans at the click of a button over the internet.
She said: “It seems very easy and tempting, especially in the run up to Christmas. But these loans come with an extortionate interest rate of 183.2%.”
Carol Edwards, head of education at the Consumer Council, added: “The Consumer Council fully supports Mary Bradley in highlighting this serious issue. Many people are finding it increasingly difficult to get credit and some of our most hard pressed families may feel forced into considering high interest loans such as the one offered by Provident and by other retailers.
“However, the interest rates are enormous, so while it might seem like a quick fix to get you through Christmas, consumers need to have their eyes wide open and work out exactly what it will cost them in the long run.”
A spokesman for Provident said: “Provident Financial has 40,000 customers in Northern Ireland and 5,000 in Londonderry.
“Our response to your request is most people agree that APRs are not useful for comparing the cost of small sum, short-term credit.
“A typical Provident loan for £100 has a total charge of £68 which includes the arrangement of the loan, the interest, collection of the 56 weekly £3 payments at the customer's home, and the guarantee that the total amount to be repaid will never rise — even if customers are late in repaying their loan.
“This generates an APR of 183.2% which appears to bear no relation to the terms of the product. 94% of Provident's customers say they are satisfied with the service.”